Many people can always identify with the weight and meaning of debt. From nations, to families and in the personal level, debt seems to be a negative force that is forcefully designed to limit our lifestyle. Therefore, one of the main reasons in achieving financial freedom is to become free of debt.
However, in discussing a changing mindset towards financial freedom, becoming debt-free is not really the ultimate goal to describe financial success. In fact, more and more people acknowledge that debt can just be as useful as saving in creating wealth. As an example, the most powerful country in the world actually runs on debt. Thus, changing our attitude on money and debt in particular will help us develop a mindset towards financial freedom.
Good Debt
Debts are classified into good debts and bad debts. Good debts are useful tools in advancing one's productive intentions. For example, debts that are used for good investments are actually more powerful than doing nothing with our cash except to hold it. In other words, good debts are usually called productive financing.
These productive financing can include education plans which help you become a more productive individual and earn more money. Another productive financing includes useful insurance policies. What is most important in good debt is that the return for your investments should outweigh the cost of debt that financed your investment.
Self-made millionaires see debt as a tool to succeed instead of an unnecessary hindrance. People who find opportunities and act on it are likely to succeed even if it involves borrowing money. What is most important is applying sound financial strategies to make sure that the debt incurred is transformed into a roaring impact.
Bad Debt
Meanwhile a bad debt is known as a liability rather than productive financing. There are many reasons why seemingly good debts can turn bad. One of the reasons is incurring too many good debts to a point that it is not economically responsible. People who posses the millionaire's mindset know too well that debt is just as good a tool as the result it creates. In an abstract sense, debt should not be considered as a savior or an end to all your financial hurdles.
Debt is a cost
We all know the nature of debt. Debt is a credit in the present to be paid in the future. However, a millionaire's mindset will see debt as a necessary cost. In this light, debt is just as trivial as any cost. You can choose to buy something now or pay for it later. In the end, they are both deducted from you. In order to be free of debt and be on your way to financial independence, treat debt just like you treat every other cost. What is most important is that you do not let the hesitation to incur debt scare you into making wise financial decisions.
Debt-Free? Cash Poor!
In order to achieve financial freedom, one must not overrate the risky aspects of debt. Some people who force their lifestyle into paying outstanding debt end up putting off money that could have gone to savings for the future. There is no elementary arithmetic formula to express the management of saving for the future and paying for debt. However, there are many ways to balance different financial techniques in order to achieve financial freedom despite having debt.
Remember that financial freedom is being over the limitations of money. Debt should not be a hindrance in making money work for you.
